2014-01-02 Budget Attachments

2013/14 INVESTMENT POLICY


Ethics and conflicts of interest
Consideration will be given to ethical investment principles in determining the approved
counterparty lists for investment of funds.

Investment officers / employees shall refrain from personal activities that would conflict with the
proper execution and management of Council’s investment portfolio. This includes activities that
would impair the investment officer’s ability to make impartial decisions.

This policy requires that employees and investment officials disclose to the Chief Executive Officer
any conflict of interest or any investment positions that could be related to the investment portfolio.
Delegation of authority
Authority for implementation of the Investment Policy is delegated by Council to the Chief
Executive Officer in accordance with the Local Government Act 2009, Section 257 (1) (b) –
Delegation of local government powers.

Authority for the day-to-day management of Council’s Investment Portfolio is to be delegated by
the Chief Executive Officer to the Director Organisational Services and to the Financial Services
Co-ordinator in accordance with section 259 of the Local Government Act 2009, and subject to
regular reviews with the Director Organisational Services and Chief Executive Officer.

GUIDING PRINCIPLES
Council’s overall objective is to invest its funds at the most advantageous rate of interest available
to it at the time, for that investment type, and in a way that it considers most appropriate given the
circumstances.

In priority, the order of investment activities shall be preservation of capital, liquidity, and return.
Preservation of capital
Preservation of capital shall be the principal objective of the investment portfolio. Investments are
to be performed in a manner that seeks to ensure security of principal of the overall portfolio. This
would include managing credit and interest rate risk with given risk management parameters and
avoiding any transactions that would prejudice confidence in Council or its associated entities.

Credit Risk
Council will evaluate and assess credit risk prior to investment. Credit risk is the risk of loss due to
the failure of an investment issuer or guarantor. The investment officer will minimise credit risk in
the investment portfolio by prequalifying all transactions including the brokers / securities dealers
with which they do business, diversify the portfolio and limit transactions to secure investments.

Interest Rate Risk
The investment officers shall seek to minimise the risk of a change in the market value of the
portfolio because of a change in interest rates. This would be achieved by measuring the
investment term against the cash flow requirements of Council and structuring the portfolio
accordingly. This will avoid having to sell securities prior to maturity in the open market. Secondly,
interest rate risk can be limited by investing in shorter term securities.

Maintenance of liquidity
The investment portfolio will maintain sufficient liquidity to meet all reasonably anticipated
operating cash flow requirements of Council, as and when they fall due, without incurring
significant transaction costs due to being required to sell an investment. For these purposes,
illiquid investments are defined as investments that are not publicly traded in sufficient volume to
facilitate, under most market conditions, prompt sale without severe market price effect.




Noosa Shire Council                                                                              Page 2 of 7